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Home Mortgage Rates Scaling Up



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By : Leticia Carvalho    99 or more times read
Treasury market continues sell off making mortgage rates make its way up the scale once again. Despite proposals from the government that aim to ease mortgage payment for individuals, rates have been going against affordability of many struggling homeowners. More so, risks of further increase of these rates are projected still to come.

Frightened money is making its way beyond the risk curve. Treasuries are making sales and purchases more that the expected yields on debts on stocks and municipals. All these are happening despite the successful efforts of the Federal to bring credit markets to a stable state.

Late in November, the Federal made an announcement of intention to purchase almost half a trillion of dollars of securities backed up by mortgage. This is believed to have brought the home mortgage rates into decline. Even with the announcement of the MBS to purchase some mortgages did not post any effect on lowering the rates.

Moreover, in the absence of the government in providing conventional home mortgages, chances of an increase in home mortgage would only grow. Since Fannie and Freddie are not guaranteeing these mortgages, many of the banks do not prefer jumbo mortgages which are 2-3% higher. This is an unlikely scene for banks since a secondary market can be obtained from such.

Even the declining housing prices in the market and mortgage debts discharged by bankruptcy and modifications of loans are affecting the rates. Hence, continuous and total support of the government would be necessary in order to rescue the mortgage market.

With the efforts of the Federal in creating ways to ease the home mortgage rates, investors are only seeing an even worse inflation as an outcome. A lot of investment managers, who have projected the meltdown in finance, see an overpricing in the treasury market. Although it may not be considered a total threat, some unlikely situations are likely to occur with continuous guarantees and lending offered by the government.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.

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